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In West Dallas, Texas, 22-year-old drug dealer Chris Smith, desperate to pay his debt to loan sharks, decides to murder his mother, Adele, to collect the $50,000 of insurance money. He has been told by his mother's boyfriend Rex that the sole beneficiary will be Chris' younger sister Dottie. Assuming Dottie would share any money she gets with them, Chris manages to rope his dim-witted father Ansel into a conspiracy to kill Adele – who is Ansel's ex-wife – to get the money. Chris also enlists the help of Joe Cooper, a policedetective who has a side career as a contract killer. Ansel plans to split the money four ways between themselves, Dottie, and Ansel's new wife Sharla. Dottie hears the plan as they are talking, and agrees that it's a good idea.

The plan almost fails when Chris is unable to front Joe's fee. However, Joe is interested in the odd, childlike Dottie and offers to take her as a "retainer" until the insurance comes through. Through Dottie's interaction with Joe, it is revealed that Adele tried to kill Dottie once when she was an infant. Joe "dates" Dottie and then appears to be staying over at their home and having sex with her regularly. Chris has a change of heart and asks him to call off the hit, only to discover that Joe has already killed Adele. With Chris' reluctant help, Joe hides the body in a car and torches it.

After Adele's death is discovered, the family learns that the insurance claim actually pays to Rex, rather than Dottie. Chris admits he originally heard the details about the policy from Rex, who also told him about Joe. The family all realize that Chris was duped into hiring someone to kill Adele. Immediately afterwards, Chris tries to talk Dottie into running away with him to escape the loan sharks. Dottie says she will go with him, but she must see Joe again first.

After Ansel and Sharla return home from Adele's funeral, they find Joe inside with Dottie. He comes out of her room and asks increasingly pointed questions of Sharla, which ultimately leads her to admit that she knew the policy was really $100,000 (accidental death is double). Joe shows them a check of that amount payable to Rex, as well as incriminating photos which prove Sharla was having an affair with him. Angered, Ansel declines to protect Sharla when Joe punches her and forces her to simulate oral sex on a fried chicken drumstick.

Joe knows Chris is coming to take Dottie away and he threatens to murder Ansel and Sharla if they don't stop him. After Chris is seated for dinner, Joe announces that he and Dottie will be married. Chris refuses to let them, ordering Dottie to leave with him; Joe tells her to stay where she is. For a moment Dottie sits there, then she gets up and turns and, while the men yell out at her, Chris threatens Joe with a gun and the two struggle. Ansel and Sharla jump in to assist Joe as he brutally beats Chris. In all the confusion, Dottie recovers the gun and, in a rage, she fires several shots, killing Chris and seriously wounding Ansel. Dottie turns the gun on Joe, telling him that she is pregnant. Joe appears overjoyed as he inches closer to Dottie. The film ends just as Dottie moves her finger back on the trigger.

"Cutting would not have made it mass appeal. Cutting it would have been the equivalent of what members of the United States government and military leaders said about the Vietnam War. They said, "We have to destroy Vietnam in order to save it," and that's what I would have done to Killer Joe. To get an R rating, I would have had to destroy it in order to save it and I wasn't interested in doing that."

In the United States, the film received an NC-17 rating from the MPAA for "graphic disturbing content involving violence and sexuality, and a scene of brutality."[7] After an unsuccessful appeal, LD Entertainment announced plans to release the film uncut with the NC-17 on July 27, 2012.[1]

On October 23, 2012, the MPAA rating was surrendered, and thus the film was released on DVD and Blu-ray with the unrated version in the United States.[8] An edited R-rated version was also released on DVD.[9]

The film was not a box office success, only grossing $1,987,762 in the domestic market and $2,645,906 internationally for a worldwide total of $4,633,668.[4] The film was only released in 75 theaters nationwide and closed on October 14, nine days prior to the rating being surrendered. The film had an estimated $10 million budget.[3]

Killer Joe received positive reviews from critics and has a rating of 78% on Rotten Tomatoes based on 159 reviews with an average rating of 6.8 out of 10. The consensus states: "Violent, darkly comic, and full of strong performances, Killer Joe proves William Friedkin hasn't lost his touch, even if the plot may be too lurid for some."[16] The film also has a score of 62 out of 100 on Metacritic based on 38 reviews.[17]

According to Justin Chang of Variety, "Killer Joe was Letts' first play, written more than a decade before his smash hit August: Osage County, and the text's sneer of condescension toward its panoply of trailer-trash caricatures has not entirely abated here," yet "the film doesn't belabor even its cheaper punchlines, and the fleet, kinetic visual style devised by d.p.Caleb Deschanel and editor Darrin Navarro emphasizes narrative momentum over cruel comedy. To be sure, Friedkin is clearly amused and appalled by his slovenly, foul-mouthed characters, with their off-the-charts levels of dysfunction and incompetence. But he directs them vigorously enough, pushing them past the realm of caricature to individuate themselves onscreen."[18]

The Daily Telegraph said Church, Gershon, and Hirsch portray a "uniformly gormless family unit" in a film whose "positively Jacobean climax [earns] its 18 certificate and then some."[5]